Edited by Manfred Neumann and Jürgen Weigand
Chapter 5: Financial services: strategic positioning and competitive issues
Liberalization, deregulation, and advances in information technology have changed the financial landscape dramatically. Interbank competition has heated up and banks face increasing competition from non-banking financial institutions and the financial markets. The traditional predictability of the industry is gone. Product innovations, new distribution channels, and emerging new competitors are in abundance. The unprecedented 2007–09 financial crisis has further highlighted the enormous changes and uncertainty that characterize the industry. How to look at the positioning of banks in general? How is their role evolving, and what can be said about the structure of the banking industry “tomorrow?” These are the questions being addressed in this chapter. We will argue that the ongoing revolution in information technology has improved information dissemination and enhanced the overall functioning of financial markets. Does this tilt the comparative competitive advantage to the transaction-oriented financial markets? In particular, many suggest that the banks’ traditional comparative advantages in relationship banking have been diluted by transaction-oriented finance.
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